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June 14 2012 issue

Thursday, June 14, 2012
Sandler, Travis & Rosenberg Trade Report

CBP Working to Modernize, Expand Role of Customs Brokers

An ongoing project being conducted by U.S. Customs and Border Protection could yield significant changes for customs brokers. CBP states that the key concept of its Role of the Broker Initiative is to meaningfully transform the relationship between the agency and brokers by recognizing their role as a communicator and force multiplier to increase compliance, especially for small and medium-sized importers. There are two major projects underway as part of this initiative: redesigning the customs broker regulations in 19 CFR Part 111, and allowing brokers to pre-certify applicants for the Importer Self-Assessment program.

Broker Regulations Rewrite. CBP states that its broker regulations have not kept up with advancements in technology and its own trade facilitation goals. The agency is attempting to address this deficiency through regulatory amendments that will (a) clarify brokers’ responsibilities related to importer validation and provide greater visibility of importers, (b) modernize the regulations to align with current electronic capabilities and business practices, (c) reinforce the broker’s responsibility to exercise due diligence in conducting business and (d) “professionalize” the customs broker by introducing a continuing education requirement. CBP officials have said the updated regulations will also include provisions on due process proceedings for brokers, including penalties and suspension and revocation of licenses; establishing bona fides and broker relationships with unlicensed parties; and business model alignment between the trade and CBP, including conducting customs business within the geographic bounds of the U.S. and rethinking the district permitting requirements.

Over the next few months CBP will conduct nine webinars to gather input from importers and brokers on the specific changes that should be made. CBP is looking especially to receive comments regarding (a) relations with unlicensed parties and the use of powers of attorney to assign and clarify responsibility for customs transactions, (b) the development and administration of a continuing education requirement, and (c) how to allow for maximum flexibility in broker operations to take advantage of modern business practices and information technology while protecting U.S. revenue and deterring commercial fraud. Once this information gathering process is complete CBP will begin drafting an advance notice of proposed rulemaking, although officials have given no indication of when that process might be completed.

CBP is pursuing other related changes as well. In February 2012 the agency launched the automation of the broker exam application process, which has streamlined and accelerated the process, improved accuracy, and increased the security of personally identifiable information. In May 2011 CBP begin a test in New York and Chicago of a streamlined broker licensing process that has reduced processing time from 9-12 months to three months. CBP anticipates expanding this program to Long Beach, Atlanta, Miami, Detroit, Houston and Dallas by the end of 2012.

Broker Pre-Certification. Under a pilot program expected to be initiated later this summer, customs brokers who apply and are accepted into the Importer Self -Assessment Pre-Certification Program will perform the comprehensive review of the ISA applicant’s package and evaluate the applicant’s readiness to self-govern and participate in the ISA program. The accredited broker will draft a final report on the applicant’s ISA readiness and submit it to CBP for processing and validation. If there are no anomalies, the report will be scheduled for ISA Review Board approval and certification. CBP states that this process will allow eligible ISA applicants to be approved in 90-120 days rather than 9-18 months.

While the full details of the ICA-PC program will be included in a forthcoming Federal Register notice, CBP states that the initial requirements for broker participants will be to (1) have been C-TPAT certified for at least three years, (2) have operated as a licensed customs broker representing importers as a filer for at least five years, (3) maintain written internal control procedures designed to ensure compliance with CBP-related activities, and (4) have a history of compliance (i.e., no substantial penalties).

Following the pilot CBP will evaluate its success and make adjustments as necessary. At that time CBP would also like to reconsider allowing non entry-filing participants and explore the possibility of certifying other customs professionals, such as consultants and academics. A subcommittee of the Advisory Committee on Commercial Operations of CBP (COAC) has expressed support for this latter objective but cautioned that if such an expansion is approved CBP should establish “uniformity and standardization within the pre-certification process” to “ensure that pre-certification evaluations are consistent across the myriad of providers authorized to conduct those services.”

U.S., Canada Establish Joint Port Operations Committees at Eight Canadian Airports

The Canada Border Services Agency announced June 10 the establishment of binational port operations committees at eight Canadian airports that provide U.S. preclearance services. A CBSA press release states that this step, taken under the Beyond the Border Action Plan for Perimeter Security and Economic Competitiveness, is designed to ensure that cooperation and partnering result in enhanced collaboration on overall port management, coordinated emergency response and preparedness, the opportunity to integrate enforcement efforts, and an improvement to the efficiency of the mitigation strategies for border wait times. Among other things, each committee has developed an action plan that includes specific initiatives to improve border management and efficiency.

The eight airports at which committees are being established are as follows.

- Vancouver International Airport, Vancouver, British Columbia
- Calgary International Airport, Calgary, Alberta
- Edmonton International Airport, Edmonton, Alberta
- James Armstrong Richardson International Airport, Winnipeg, Manitoba
- Pearson International Airport, Toronto, Ontario
- MacDonald-Cartier International Airport, Ottawa, Ontario
- Pierre-Elliott-Trudeau International Airport, Montreal, Quebec
- Halifax Stanfield International Airport, Halifax, Nova Scotia

Committees have previously been established at the following land ports of entry.

- Delta, British Columbia, and Point Roberts, Washington
- Surrey, British Columbia, and Blaine, Washington
- Aldergrove, British Columbia, and Lynden, Washington
- Huntingdon, British Columbia, and Sumas, Washington
- Osoyoos, British Columbia, and Oroville, Washington
- Coutts, Alberta, and Sweetgrass, Montana
- Emerson, Manitoba, and Pembina, North Dakota
- Fort Frances, Ontario, and International Falls-Ranier, Minnesota
- Sault Ste. Marie, Ontario, and Sault Ste. Marie, Michigan
- Sarnia, Ontario, and Port Huron, Michigan
- Windsor, Ontario, and Detroit, Michigan
- Niagara Falls-Fort Erie, Ontario, and Buffalo-Niagara Falls, New York
- Lansdowne, Ontario, and Alexandria Bay, New York
- Cornwall, Ontario, and Massena, New York
- Lacolle, Quebec, and Champlain-Rouses Point, New York
- St. Armand-Philipsburg, Quebec, and Highgate Springs-Alburg, Vermont
- Stanstead, Quebec, and Derby Line, Vermont
- Edmundston, New Brunswick, and Madawaska, Maine
- Woodstock, New Brunswick, and Houlton, Maine
- St. Stephen, New Brunswick and Calais, Maine

The committees meet at least four times a year. They are composed of representatives of the CBSA and U.S. Customs and Border Protection, and external partners, including other federal agencies, state or provincial highway departments, bridge commissions, airport authorities, local fire and police departments and other stakeholders, are invited to attend when issues specific to their areas are discussed.

Consistent with the Beyond the Border Action Plan, a full evaluation of the committees will be conducted by the end of 2012 and in 2013 consideration will be given to expanding them to additional land ports of entry.

$619 Million Settlement Largest Ever for OFAC Sanctions Violations

The Treasury Department’s Office of Foreign Assets Control announced June 12 a $619 million settlement with a bank headquartered in the Netherlands, the largest-ever OFAC settlement of any kind. This settlement resolves OFAC’s investigation into what it calls the bank’s “intentional manipulation and deletion of information about U.S.-sanctioned parties in more than 20,000 financial and trade transactions routed through third-party banks located in the United States.” One U.S. official stated that “for more than a decade” these actions “helped provide state sponsors of terror and other sanctioned entities” in countries like Cuba, Iran, Burma, Sudan and Libya “with access to the U.S. financial system, allowing them to move billions of dollars through U.S. banks for illicit purchases and other activities.”

As part of the settlement the bank will be required to review and report to OFAC on its policies and procedures and their implementation, taking an appropriate risk-focused sampling of U.S. dollar payments to ensure that its OFAC compliance program is functioning effectively to detect, correct and report any OFAC-sanctioned transactions that might occur. OFAC has also referred this matter for criminal investigation “in light of the sheer number of apparent violations, the array of stratagems employed by [the bank] to conceal its actions, and the seriousness of the conduct, which in some cases was ongoing for a very long period of time.” The apparent violations totaled more than $1.6 billion routed through the U.S.

CPSC Issues Guidance on Drawstrings in Children’s Upper Outerwear

The Consumer Product Safety Commission recently posted to its Web site ( a list of answers to frequently asked questions on the prohibition on drawstrings in children’s upper outerwear. The information presented in this FAQ includes the following.

- The CPSC prohibits drawstrings around the hood and neck area of children’s upper outerwear in sizes 2T to 12 because they present a strangulation hazard.

- Drawstrings are defined as a non-retractable cord, ribbon or tape of any material to pull together parts of upper outerwear to provide for closure. This definition is not limited to cords, ribbons or tapes that pass through a channel and does not exclude ties.

- The length of drawstrings around the waist and bottom of children’s upper outerwear in sizes 2T to 16 is limited to three inches outside the drawstring channel when the garment is expanded to its fullest width. Such garments must be free of toggles, knots and other attachments at the free ends of drawstrings. Waist and bottom drawstrings in upper outerwear sizes 2T to 16
must be one continuous string and be bar tacked (i.e., stitched through to prevent the drawstring from being pulled through its channel).

- Garments in girls’ and boys’ size large are equivalent to size 12. Garments in girls’ and boys’ size extra large are equivalent to size 16.

- Upper outerwear is defined as clothing such as jackets and sweatshirts, including lightweight outerwear appropriate for use in warmer climates, that is generally intended to be worn on the exterior of other garments. Pants, shorts and skirts are excluded.

- The CPSC recommends that children’s upper outerwear have alternative closures such as snaps, buttons, Velcro or elastic.

New Certification Requirements for All Importers of Solar Panels

U.S. Customs and Border Protection issued a message June 13 outlining new requirements for all importers of solar panels in light of the recent imposition of antidumping and countervailing duty deposit requirements on solar cells and panels from China, including solar panels produced in third countries from Chinese solar cells.

CBP states that importers of solar panels from all countries that do not contain Chinese solar cells are required to certify that the panels do not contain Chinese solar cells and provide this certification at CBP’s request. If an importer does not provide this certification when CBP requests it, the Department of Commerce has instructed CBP to collect AD and CV duties on the corresponding imports.

Importers of solar panels exported from China that do not contain Chinese solar cells are also required to maintain a certification from the exporter. If importers of this merchandise do not provide both the importer and exporter certification when CBP requests it, the DOC has instructed CBP to collect AD and CV duties on the corresponding imports.

CBP notes that these certifications should not be provided as part of the entry document package unless specifically requested. CBP may also request additional documentation supporting the certification.

Military Training Equipment Proposed for Transfer to Commerce Control List

As part of President Obama’s Export Control Reform Initiative the Bureau of Industry and Security has issued a proposed rule describing how military training equipment and related items that the president determines no longer warrant control under the U.S. Munitions List would be controlled under the Commerce Control List in new export control classification numbers 0A614, 0B614, 0D614 and 0E614. Concurrently, the State Department’s Directorate of Defense Trade Controls has issued a proposed rule that would revise USML category IX to describe more precisely those types of such articles that warrant continuing control on the USML. Comments on these proposed rules are due no later than July 30.

BIS states that the coverage of the new ECCNs would be as follows.

0A614 – military training equipment and specific parts, components, and accessories and attachments therefor

0B614 – test, inspection and production equipment, including related parts, components, and accessories and attachments, for the production or development of commodities controlled by ECCN 0A614 or articles controlled by USML Category IX

0D614 – software for the development, production, operation or maintenance of items controlled by ECCNs 0A614 or 0B614

0E614 – technology for the development, production, operation, installation, maintenance, repair or overhaul of commodities controlled by ECCNs 0A614 or 0B614 or software controlled by ECCN 0D614

Click here for BIS rule

Click here for State Dept. rule

AD/CV Notices: Pipe, Pipe Fittings, Solar Cells

Agency: ITC.
Commodity: Pipe and tube.
Country: Brazil, India, Korea, Mexico, Taiwan, Thailand and Turkey.
Nature of Notice: June 14 open meeting for vote in sunset reviews of AD and CV duty orders.

Agency: ITC.
Commodity: Stainless steel butt-weld pipe fittings.
Country: Italy, Malaysia and the Philippines.
Nature of Notice: June 20 open meeting for vote in sunset reviews of AD duty orders.

Agency: ITC.
Commodity: Crystalline silicon photovoltaic cells and modules.
Country: China.
Nature of Notice: Scheduling of final phase of AD and CV injury investigations.
Details: Staff report made public after Sept. 13, public hearing scheduled for Oct. 3, requests to appear at hearing due Sept. 19, pre-hearing briefs due Sept. 20, post-hearing briefs due Oct. 11, final comments due Nov. 1.

DR-CAFTA Short Supply Request on Nylon/Spandex Knit Fabrics

The Committee for the Implementation of Textile Agreements is seeking comments by June 21 on a short supply request alleging that certain seamless knit fabrics of nylon/spandex, classified under HTSUS 6117.90.00, are not available in commercial quantities in a timely manner from a supplier in the DR-CAFTA countries. The petitioner is therefore requesting that this fabric be added to the short supply list in Annex 3.25 of DR-CAFTA.

Export Privileges Suspended for Illegal Exports to Iran

The Bureau of Industry and Security has issued an export denial order in connection with illegal exports to Iran via the United Arab Emirates. This order suspends until June 3, 2021, all export privileges for a Pennsylvania man and a related Pennsylvania company due to the man’s conviction on two counts of willfully and knowingly aiding and abetting the illegal export of ultrasonic liquid processors, stimulus isolators and laboratory equipment to Iran. The man has also been sentenced to 33 months in prison followed by three years of supervised release as well as a $400 special assessment.

This order revokes all export licenses in which the man had an interest at the time of his conviction. It does not, however, prohibit any export, reexport or other transaction subject to the Export Administration Regulations where the only items involved that are subject to the EAR are the foreign-produced direct product of U.S.-origin technology.

IPR Enforcement Actions on Mobile Devices, GPS Systems, Portable Storage Devices

New Import Restrictions on Mobile Devices. In investigation 337-TA-744 the International Trade Commission has determined that the importation, sale for importation and sale within the U.S. after importation of certain mobile devices, associated software and components thereof are violating the patents specified by complainant Microsoft Corporation. As a result, the ITC is issuing a limited exclusion order prohibiting the unlicensed entry for consumption of infringing goods that are manufactured abroad or imported by or on behalf of Motorola Mobility Inc. The order provides an exception for service, repair or replacement articles for use in servicing, repairing or replacing mobile devices under warranty or insurance contract. The ITC has also determined that Motorola will be required to post a bond in the amount of $0.33 per subject device entered for consumption during the 60-day period the president has to review the ITC order.

Patent Infringement Probe of Automotive GPS Systems Terminated. The International Trade Administration has terminated patent infringement investigation 337-TA-814 of certain automotive GPS navigation systems, components thereof and products containing same based on complainant Beacon Navigation GmbH’s withdrawal of its complaint.

Portable Storage Device Investigation Terminated. The International Trade Commission has terminated patent infringement investigation 337-TA-788 of certain USB portable storage devices, including USB flash drives and components thereof, as to all remaining respondents. This follows the withdrawal of the complaint by Trek 2000 International Ltd., Trek Technology (Singapore) Pte. Ltd. and S-Corn System (S) Pte. Ltd., all of Singapore.

Foreign Regulatory Changes Could Affect Exports of Appliances, Foods, Swimming Safety Devices, Plastic Products, Glass, Cement

According to the National Institute of Standards and Technology, the World Trade Organization has been notified of regulatory changes that may affect exports of specific products to the following countries. For information on how these restrictions may affect your business, contact ST&R.

Chile – certification procedure for ethanol-fired decorative appliances (comments due by July 26)

Colombia – withdrawal of draft amended technical regulation on milk and issuance of new draft amendment (comments due by Aug. 27)

Colombia – draft technical regulation on safety devices used in swimming pools (comments due by July 20)

Ecuador – draft technical regulation on disposal of disused plastic products and plastic waste (comments due by Aug. 16)

Mexico – draft official standard on labeling and test methods of thermal and optical characteristics of glass and glazing systems for buildings (comments due by July 16)

Mexico – draft official standard on specifications and test methods for domestic cooking appliances that use liquefied petroleum gas or natural gas (comments due by July 16)

Paraguay – draft decree on cement imports (comments due by Aug. 1)

Ocean Transportation Intermediary License Revocations, Applicants

OTI Licenses Revoked. The Federal Maritime Commission has given notice that the following ocean transportation intermediary licenses have been revoked. A revocation may occur after a license is surrendered voluntarily by the OTI or for failure to maintain a valid bond.

- license #018547N: Pallets in Motion, Carson, Calif.
- license #019439N: Shipping Express Inc., Jamaica, N.Y.
- license #021442F: Ferm Holdings Inc., Miami, Fla.
- license #022844N: World Freight Solutions Inc., Mobile, Ala.

OTI License Applicants. The Federal Maritime Commission has provided notice that the following applicants have filed applications for licenses as non-vessel-operating common carrier and/or ocean freight forwarder ocean transportation intermediaries. Persons knowing of any reason why any of these applicants should not receive a license are requested to contact the FMC.

- ABC Trucking and Logistics LLC, Atlanta, Ga.
- Alexis Cruz d/b/a Resources International, New York, N.Y.
- ARCA International Inc., Orlando, Fla.
- Atlantic Cargo Logistics LLC, Deland, Fla.
- C.H. Robinson International Inc. d/b/a Christal Lines, Eden Prairie, Minn.
- Carrytech LLC, Orange, Calif.
- Deep Ocean International Logistics LLC, Houston, Texas
- Global Expeditors LLC, Avenel, N.J.
- Global Link Logistics Inc., Tucker, Ga.
- Global Shipping & Freight International Inc., Tampa, Fla.
- Jetta Cargo Services Inc., Hawthorne, Calif.
- JP Express Shipping Corp., Bronx, N.Y.
- “KazTransLimited” Limited Partnership, Kazakhstan
- Madkem Logistics Inc., Brooklyn, N.Y.
- Matson Logistics Warehousing Inc., Concord, Calif.
- Ocean Star International Inc. d/b/a International Van Lines, Coral Springs, Fla.
- OES Logistics Inc., Cerritos, Calif.
- Overseas-Forwarding Int. Schiffahrts Speditionsgesellschaft MBH d/b/a Overseas Shipping
and Transport LLC, Hamburg, Germany
- Premiere Logistics Inc., Redondo Beach, Calif.
- Rafael Castillo d/b/a Castle Forwarding, Compton, Calif.
- Ray-Mont Logistics Corp., Spokane Valley, Wash.
- Richard J. Gonerko d/b/a Zonn Agency, Los Altos, Calif.
- Seastar International Group Inc., Bridgewater, N.J.
- Sterling Relocation Americas Inc., Wilton, Conn.
- Swift International Logistics Inc., West Orange, N.J.
- T & B Master Logistics Inc., Carson, Calif.
- Transmar Inc., Miami, Fla.
- U S Cargo International Inc., Miami, Fla.

User Fees for Trade Promotion Services Proposed for Increase

The International Trade Administration is requesting comments no later than Aug. 13 on its intent to increase user fees for the following trade promotion services.

Business Service Provider – helps both U.S. and foreign professional service providers promote services that facilitate export transactions, such as market assessments, financing, accounting or legal services

Featured U.S. Exporter – provides a virtual directory of U.S. products featured on U.S. Foreign and Commercial Service Web sites around the world, enabling U.S. exporters to target specific markets in the local language of business

Gold Key Service – arranges meetings in foreign markets to match U.S. exporters with prospective sales agents or distributors, manufacturers, licensees, franchisees or strategic partners

International Company Profile – provides a research report on a prospective business partner’s commercial viability and financial circumstances, including topics such as business registration, credit rating, profit and loss data, pending litigation, reputation, and opinion about the firm and export prospects

International Partner Service – provides a report concerning prospective sales agents or distributors, manufacturers, licensees, franchisees or strategic partners

Quicktake – helps U.S. exporters quickly determine which among more than 30 European markets offer the best export opportunities for a specific product or service and provides direction on how to enter those markets

The ITA notes that these services involve relatively more intensive time engagements with particular client firms and that it will continue to provide its core information and services without charge.

The ITA is also proposing to reduce from 65% to 50% the hourly rate discount offered to small and medium-sized enterprises and to eliminate the SME incentive program piloted in 2008.

Advance Notice May be Required for Imports of Genetically Modified Microorganism

The Environmental Protection Agency is proposing new import restrictions on the genetically modified microorganism Trichoderma reesei, which is used to produce enzymes for ethanol production, after determining that its use under certain conditions may be hazardous to human health and the environment. Under this rule, persons who intend to import, manufacture or process this microorganism for an activity that is designated as a significant new use by this rule would have to notify EPA at least 90 days before commencing that activity. This notification would provide EPA with the opportunity to evaluate the intended use and, if necessary, to prohibit or limit that activity before it occurs. Comments on this proposal are due no later than July 13.

New and Amended Maritime Agreements Filed

The Federal Maritime Commission has issued notice that the following new or amended agreements have been filed. Interested parties may submit comments by June 25.

United States/Australasia Discussion Agreement – The amendment extends the duration of the existing minimum service levels set forth in the agreement.

Hapag-Lloyd/NYK-Hanjin Shipping Slot Charter Agreement – The agreement authorizes Hanjin to charter space to Hapag-Lloyd and NYK on three of its services in the trade between the U.S. West Coast and ports in Korea, China, Taiwan, Thailand, Vietnam, Singapore and Japan.

Port of Los Angeles Data Delivery Agreement – The agreement would provide for delivery of data to the Port of Los Angeles by the participating marine terminal operators and PierPass Inc. and various arrangements associated with that data delivery.

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